Many people believe that their biggest asset is their home. For most of us, our biggest asset is the ability to work and earn an income. Not being able to work - due to a job loss or a disability having taken away the ability to work - is often financially devastating.
Everyone who works for a living is very familiar with what can happen if they are fired. On the other hand, the possibility of becoming seriously disabled is a risk few seem to think much about. How likely is it that you will become disabled? According to one study, 30% of all Americans between the ages of 35 and 65 suffered a disability lasting at least 90 days. The risk of disability is real. The question is, "What to do about it?".
Don't Count on Social Security
A few individuals do manage to qualify for disability benefits from Social Security. However, the Social Security definition of "disability" is so strict that over 60% of initial claims are rejected. Obviously, something else beyond Social Security is needed.
Many employers will provide - or make available - disability insurance on a group basis. However, even those who are covered by a group policy can still be at substantial risk. Employer-sponsored disability policies seldom provide you with more than 60% of your monthly salary. Many policies set a monthly maximum benefit that may be far less than what some people earn. Income taxes can also be an issue; if the employer is paying the full cost of the coverage, disability benefits are fully taxable.
Individual Disability Income Insurance
For many, the real solution to the disability problem is individual disability income insurance. Although individual policies may cost you more, as long as you pay the premiums the benefits are not taxable. Plus, an individual policy allows you to tailor its terms to fit your own needs. Factors to consider when shopping for an individual disability policy include:
- Company strength: You need to know if the company is financially sound.
- Definition of disability: Look for a policy that defines disability in the broadest terms possible. Some policies will permit you to work in a different occupation and still collect disability benefits.
- Elimination period: How long must you wait before disability payments begin?
- Inflation protection: Try to find a policy that adjusts benefits for inflation.
At Viti Financial we offer individual and group disability insurance. For more information, please contact one of our knowledgeable insurance representatives.